» PECO. An Exelon Company

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1 Legal Dcpurtmcni 230! Market Strocl/S23-l P. O. Hox 8699 Pliilatldphia. I'A I9I01-X699» PECO. An Exelon Company Uirccl Dial: (1 Hmail: Michael.swcrlinmo\!Xi'l<iiicorp,c»m April 13,2015 Rosemary Chiavetta, Secretary Pennsylvania Public Utility Commission Commonwealth Keystone Building 400 North Street, Second Floor Harrisburg, PA APR PA PUBLIC UTILITY COMMISSION SECRETARY'S BUREAU* Re: Proposed Rulemaking Order Docket No: L Dear Secretary Chiavetta: Attached please find PECO Energy Company's Comments in the above referenced docket. Sincerely, ichael S. S MSS/adz Attachment

2 APR BEFORE THE PENNSYLVANIA PUBLIC UTILITY COMMISSION P A PUB uc UTJUTV COMM.^^ PROPOSED RULEMAKING FOR AUTOMATIC ADJUSTMENT CLAUSES RELATED TO ELECTRIC DEFAULT SERVICE Docket No. L COMMENTS OF PECO ENERGY COMPANY ON THE COMMISSION'S PROPOSED ORDER L INTRODUCTION On May 22, 2014, the Pennsylvania Public Utility Commission (the "Commission") issued an Advance Notice of Proposed Rulemaking Order ("ANOPR Order") 1 expressing concerns that the over and under collection of revenues associated with traditional reconciliation accounting could cause volatility in default service rates. To address these concerns, the Commission recommended applying a symmetrical rate of interest to the over and under collection mechanisms used by electric distribution companies ("EDCs"). Based on comments submitted in response lo the ANOPR Order, the Commission issued a Notice of Proposed Rulemaking Order ("NOPR Order") on October 2, The NOPR Order proposes to adopt a uniform policy regarding the rate of interest lhat should be paid or colleclcd when reconciling cosls. PECO Energy Company ("PECO") appreciates the opportunity to respond and hereby submits these comments in support of using a symmetrical rale when reconciling default service costs. ' Sec Advance Nolice of Proposed Rulemaking for Revision of ihe Commission '.v Regulations on Automatic Adjustment Clauses Related to Electric Default Service. Docket No. L (Order entered on May ).

3 II. COMMENTS A. PECO supports using a Symmetrical Interest Rate. PECO agrees wiih the following determinations made in the Commission's NOPR Order: 1) "The proposed applicable rate of interest on over and under collections would be interest at the prime rate for commercial borrowing in effect on the last day of the month the over or under collection occurred, as reported in the Wall Street Journal." (NOPR Order al 8-9). 2) "[TJhe Commission cannol predict whether the Wall Street Journal will continue to be the most appropriate market index for purposes of determining the prime rate of interest, [and as such] the Commission [should] continue to reserve the right to switch lo a more appropriate market index in the future." (NOPR Order at 11). 3) A modified interest rate applicable (o "excessive" portions of over or under recoveries is not needed at this lime. (NOPR Order at 14). Accordingly, by adopting ihese proposals, just and reasonable rates will be based on accurate projections for the full cost of service. B. Implementation of the symmetrical interest rate should not conflict with a previously-approved Default Service Plan. PECO supports the Commission's decision to implement the symmetrical interest rate on a forward-looking basis commencing with the first reconciliation filing after the effective date of the regulations adopted in this rulemaking process. (NOPR Order at 11-12). However, PECO requests one point of clarification. Specifically, PECO's current Default Service Plan ("DSP III") was approved on December 4, 2014 and covers the period from June 1, 20KS through May 31, From PECO's perspective, the symmetrical interest rate should commence with the first reconciliation filing in the next DSP that is approved after these regulations become effective. More specifically, if these regulations are adopted during PECO's DSP 111, the

4 symmetrical interest rate should not be applied mid-phase. Instead, the symmetrical interest rate should begin when PECO's DSP IV begins. PECO believes that this approach is reasonable because it will maintain the integrity of previously approved plans that were implemented prior lo the change in regulations regarding the applicable interest rate. C. Application of the symmetrical interest rate to the Transmission Service Charge The Commission's NOPR Order purports to apply a symmetrical interest rate to Transmission Service Charges ("TSCs"). PECO currently has a bypassable TSC and is in Ihe process of making a portion of it TSC non-bypassable in accordance with the Commission's Opinion and Order at Docket No. P The non-bypassable portion of the TSC (for all distribution customers) will include Regional Transmission Expansion Plan ("RTEP"), Transmission Enhancement Charge/Expansion Cost Recovery Charge ("TEC/ECRC") and Generation Deactivation/ Reliability Must Run ("RMR") costs. The bypassable portion of the TSC will include Network Integration Transmission Service ("NITS"), Unaccounted for Energy ("UFE") and meter error correction charges. PECO believes that the symmetrical interest rate should apply to both the non-bypassable and the bypassable portions of the TSC because it is reconciled on a quarterly basis. Accordingly, PECO requests that the Commission clarify that the symmetrical interest rate adopted in this proceeding should apply to both components (nonbypassable and bypassable) of PECO's TSC. 2 See Petition of PECO Energy Company for Approval of its Default Service Program for the period from June I, 2015 through May M, Docket No. P (Opinion and Order entered on December ).

5 III. CONCLUSION PECO appreciates the opportunity to comment on this important matter and requests that the Commission favorably consider these comments. Respectfully Submitted, [ichael S. Swerlind (PCN ) PECO Energy Company 2301 Market Streei P.O. Box 8699 Philadelphia, PA Phone: Fax: m ichael.swerl i ex el on corp. com April 13,2015 For PECO Energy Company ECEF /C APR PA PUBLIC UTILITY COMMISSION SECRETARY'S BUREAU 4

6 Page 1 ol From (III) 841(341 lumiavwiunit Eitkm BSC 2301 MiiVit Str*« PM3d*lpt>a. PA Oripn D. REDA StipDite 13APR15 ActWgMOLB CAD 9St1S3MNET3610 Dtlwuy Addrttt Bar Coit BHIPIO: (717) Rosemary Chiavetta, Secretary PA Public Utility Commission 400 NORTH ST FL 2 HARRISBURG, PA BILL SENDER Ri(# POI* Dipt* I mi I EN MDTA TUE -14 APR AA STANDARD OVERNIGHT PA US MDT After phntlnb this label; 1. Usolho 'Pdnl' bullon an Ihis page lo print your label loyour loser or inkjol printer. 2. Fold iho plinlod pogo along Ihe horizontal lino. 3. Place label in shipping pouch and affix ii to your shipment to thai Ihe barcode portion ol Iho label can ba read ond scanned. Warning: Uta only the printed oricinai label (or shippina, Uilng a phoioeopy of thii label (or (hipping purpose* Ulrsudulent and could ratux in Mditional billing charges, along with tho cancelation ol your FedEx accounl number, ", Uso ol Ihis systom con (Mutes your agreement lo the service conditions in Ihe current FedEx Service Guide, ovoiloble on fedex com.fedex will not be teiponaible (or any claim in excess of $100 per package, whether lha result of loss, damage, delay, non-delivery,misdelivery.or misinformation, unless you declare a higher value, pay an additional charge, document your actual loss and Tile a timely claim Limitations found in the current FedEx Service Guide apply. Your right lo recovet (rom FedEx for any loss, including intrinsic value ol Ihe package, loss ol sales, income interest, profit, altomey's foes, cosls, and other forms of damage whether direct, in ci denial, con sequential, or special is limited to tho greater of S100 or Ihe authorized declared value, Recovery cannot exceed actual documented loss.maximum for items of extraordinary value is $1,000, e.g. jewelry, precious melels, negotiable instrumonls and other items listed in oursemcoguide, Wrillen claims must be filed within strict lime IMTIJIS, SOD ci/tront FedEx Sorvico Guide, hups:// 4/13/2015